News
April
2008
TABLE
OF CONTENTS
Taiwan - IP
 Status
of New Intellectual Property Courts
China - IP
New
Regulations for Online Content Providers
Automatic
Monitoring of Pirated Content on the Internet - Until May
Law
on the Advancement of Science and Technology
China - Foreign Investment
New
Rules on Foreign-related Contract Disputes
Major
Revisions to the Catalogue for Foreign-Investment
Income
Tax Law Revisions
Paid
Annual Leave Now Required for Employees
New
Labor Arbitration Rules Adopted
China - General Legal News
Civil
Procedure Law to be Revised
Revisions
to Lawyer's Law
TAIWAN
INTELLECTUAL
PROPERTY
Intellectual
Property Case Adjudication Act and the Development of
Intellectual Property Courts
Taiwan's new IP Courts are scheduled to begin accepting
cases July 1, 2008. As promulgated by Taiwan's President in
2007, the Intellectual Property Case Adjudication Act and the
Intellectual Property Court Organization Act establish the new
IP Courts. Under the IP Court Organization Act, the Intellectual
Property Court will govern matters in relation to civil, criminal
and administrative actions over intellectual property. The jurisdiction
of the IP Court includes the following:
First
and second instances of civil litigation on intellectual property
cases;
Second
instance of criminal litigation on intellectual property cases;
First
instance of an administrative action and compulsory enforcement
action on
intellectual
property cases;
Other
cases prescribed by law or determined by the Judicial Yuan to
be within
the jurisdiction of the IP Court.
CHINA
INTELLECTUAL
PROPERTY
New
Regulations for Online Content Providers
In December 2007, the State Administration of Radio, Movie
and Television and the Ministry of Information Industry
jointly issued the Regulations on Providing Audio and Video
Programs on the Internet, which took effect on January 31,
2008.
According
to the Regulations, any company that provides online audio
and video services must obtain a license and must be a wholly
state-owned or state-holding entity. These companies must
keep user information confidential and not post false propaganda
on their websites. When providing services for payment,
they must publicly list the type, scope, and charges for
the programs, as well as other terms on suspension or termination
of services.
The
Regulations are intended to protect the lawful rights of
copyright owners and social development. The service providers
must comply with relevant laws to protect copyrights, and
obtain copyright owners' authorization for transmission
of audio and video programs, or face administrative penalties
and fines.
Automatic
Monitoring of Internet Pirated Content - Until May
The State Copyright Office is running a campaign to strictly supervise
Copyright violations on the Internet. The campaign, ending in
May, will automatically search for any unauthorized music and
movies transmitted through large websites. The system will warn
infringers to remove pirated material and cease their unauthorized
transmissions. The State Copyright Office is authorized to impose
severe penalties on those who continue their piracy.
Law
on the Advancement of Science and Technology
The Standing Committee of the NPC revised the law on the Advancement
of Science and Technology, which will take effect on July 1, 2008.
In order to develop science and education in China and foster
an innovative nation, the law calls for the state to implement
various strategies to strengthen intellectual property rights,
enforce scientific and professional ethics among researchers,
and increase investment in and dissemination of scientific research.
Under the new law, funds for research and development of new technology
may be deducted from taxable income. The law also sets out the
goal of protecting and respecting the academic freedom of scientific
researchers. The
new law allows undertakers of state-financed projects to apply
for intellectual property rights. Foreign companies entering into
joint ventures should be careful when conducting their due diligence
into ownership of IP rights.
CHINA - FOREIGN INVESTMENT
Supreme
Court Rules on Foreign-Related Contract Disputes
The Adjudication Committee of the Supreme Court adopted new
rules to resolve foreign-related contract disputes. The law
was established primarily to clarify legal jurisdiction over
transnational contractual matters. Several legal remedies for
contract disputes between transnational parties were promulgated,
among them the following:
Contracts
that fail to select governing law will be governed by the law
of the
region
that is most closely related to the contracts;
Applications of foreign law that may result in harm to the public
interest and Chinese
law will be replaced by applications of Chinese law;
Contracts
involving joint ventures, Sino-foreign cooperative enterprises,
wholly foreign-owned
enterprises, foreign-owned subsidiaries, or share transfers
of JVs
will be governed
by Chinese laws, regardless of the parties' chosen law.
Major
Revisions to the Catalogue for Foreign Investment
A new edition of the Catalogue for the Guidance of Foreign Investment
Industries is now in effect, which was revised to align with
China's current national development strategy and meet its World
Trade Organization obligations. Significant changes to the Catalogue
include an emphasis on promoting foreign investment in the environmental
protection and low-waste, high technology industries. The state
placed sewage treatment, hazardous waste disposal, recycling,
and renewal energy projects on its list of encouraged industries.
The new edition furthermore curtails foreign investment in highly
polluting industries, such as lead-acid battery manufacturing,
and traditional energy resource projects.
The
Catalogue was also revised to promote foreign technology and
management experience in China, and to foster technological
and managerial innovation among its own businesses. To this
end, the State has added to the investment catalogue research
and training centers, scientific research institutes, and
modern logistics and outsourcing services.
With
great caution, China is gradually opening up its financial
services sector to foreign investment. The new Catalogue further
allows foreign-invested securities firms to engage in the
underwriting of A-shares and both the underwriting and trading
of B-shares, H-shares, and government and corporate bonds.
One significant change in the financial services sector is
that foreigners are now eligible to invest in futures companies,
provided that the Chinese partner is the holding party.
To
prohibit foreign investors from participating in industries
that are deemed to be politically sensitive, activities ranging
from the development and application of human stem cells and
gene therapy technology to geological exploration have been
added to the "Prohibited" category. Foreign investment
in radio, film, television production, news websites, Internet-based
video and audio program services, business premises for Internet
access services is also prohibited.
The
Index continues to steer foreign investment toward infrastructure
and capital building projects, such as the management and
construction of high-speed railways, passenger railways, railroads,
bridges, tunnels, docks, airports, and highways.
Business
Income Tax Revisions
In December 2007, China effected the Implementation Regulations
of Enterprise Income Tax (EIT), which introduces rules regarding
resident enterprises, specifically in relation to foreign
corporations, and reduces or eliminates taxes for certain
business incomes.
The
new regulations define resident enterprises as enterprises
managed or established under the laws of China. A foreign
corporation will be deemed controlled by a resident enterprise
or Chinese citizen and resident enterprise if the following
conditions apply:
A
resident enterprise or Chinese citizen and resident enterprise
directly or
indirectly hold over ten percent of the foreign corporation's
voting shares separately
and hold over 50 percent of its shares jointly;
The resident enterprise or Chinese citizen and resident enterprise
materially
control the foreign corporation's shares,
capital, operations, purchases or sales.
Direct
control in this circumstance means that a resident enterprise
directly holds over 20 percent of the foreign corporation
shares; indirect control means that a resident indirectly
holds over 20 percent of the foreign corporation's shares.
The
new regulations allow certain fees to become tax-deductible:
certain reasonable loan fees do not need to be capitalized,
and the amortized fees related to intangible assets can be
calculated on the straight-line method. The amortization period
for intangible assets must be at least 10 years.
EIT
reduces taxes for or exempts from taxes interest earned on
treasury bonds of enterprises and qualified shares; dividends
on investment income between resident enterprises; the income
of qualified nonprofit organizations; technology transfers;
and the income of enterprises engaged in agriculture, forestry,
and aquaculture. It further reduces the tax rate for small-scale
enterprises to 20 percent. Industrial enterprises with fewer
than 100 employees; an annual taxable income below RMB300,000;
and total assets of less than RMB30 million are considered
small-scale enterprises. Other enterprises with annual taxable
income below RMB300,000; fewer than 80 employees; and total
assets of RMB10 million also fall into this category.
State
Establishes Regulations on Paid Annual Leave for Employees
On December 14, 2007, the State Council established state minimums
for annual paid leave for employees, which came into force on
January 1, 2008. According to the new regulations, employees
who have worked for over one consecutive year at any place of
employment are entitled to paid annual leave. Those who have
worked 1-10 accumulative years are entitled to five days of
annual leave; those who have worked 10-20 years are entitled
to 10 days; those who have worked for 20 years are entitled
to 15 days. The regulations further state that employers must
pay 300 percent of the daily salary of employees who do not
use their annual leave.
New
Law on Mediation and Arbitration of Labor Disputes Adopted
The Standing Committee of the NPC recently issued the Law on
Mediation and Arbitration of Labor Disputes, which takes effect
on May 1, 2008. This new law seeks to increase the rights of
employees in labor disputes, and enhance the role of labor administrative
authorities in the protection of employees' rights. Among the
many employee rights it establishes, the law extends the statute
of limitations for raising labor disputes to one year; allows
employees to apply to the local People's Court if an arbitration
committee refuses to hear their complaints; and places the burden
of proof on employers during an arbitration proceeding, requiring
them to surrender all relevant evidence under their control
to the arbitration committee or risk facing legal consequences.
Under
this law, award judgments made by an arbitration committee
are deemed final in disputes relating to claims for labor
remuneration, medical expenses for work-related injury, severance
pay or compensation with an amount lower than 12 months of
local minimum monthly salaries, and disputes relating to working
hours, paid leaves, and social insurance. An employee who
is dissatisfied with his arbitration award may file a complaint
with the local People's Court within 15 days. Employers will
not be able to file a lawsuit with the People's Court after
an arbitration award has been issued.
CHINA - GENERAL NEWS
Revisions
to Civil Procedure Law Announced
On October
28, 2007, the Standing Committee of the NPC adopted the revised
Civil Procedure Law, which will take effect on April 1, 2008.
The purpose of the revision is to safeguard channels for dispute
arbitration and to protect litigants' interests in court.
The
revised Law clarifies and broadens existing standards for opening
a civil case for retrial. For example, under the new law, a
party may apply for retrial if they discover that the original
evidence was forged or that the presiding judge accepted bribes;
believe that the original decision omitted or exceeded litigation
claims; or uncover significant new evidence. The law also extends,
under special circumstances, the period during which litigants
may request a retrial. Under previous law, parties were required
to apply for retrial within two years after a judgment took
effect. In past judicial experience, however, cause for retrial
often took longer than two years to appear, which left affected
parties with no legal recourse.
The
revised law also mandates a system of "instant enforcement"
to prevent debtors from concealing or transferring their assets
in order to avoid paying their legal liabilities. Under the
new law, a higher court may take instant enforcement measures
against those who refuse to pay due awards, and who have been
deemed as likely to conceal or transfer assets.
In
order to compel parties to perform their legal liabilities,
the law enables the court to notify relevant agencies to restrict
those who fail to perform their liabilities from traveling abroad,
and to record such liabilities on the parties' credit histories.
Revisions
to Lawyer's Law
The Revised Lawyer's Law will enter into force on June 1, 2008.
This new revision seeks to develop and expand the legal counsel's
role in building a harmonious socialist society. The law clarifies
a legal counsel's duties in protecting his clients' interests,
notably by widening attorney-client privilege.
The
law standardizes licensing requirements and procedures,
and outlines professional conduct rules. Under the revised
law, lawyers and law firms will now face heavier punishment,
including license revocation and criminal liability, for
violations of the law.
The
law further safeguards the right of attorneys to interview clients,
review documents, and conduct investigations, and exempts legal
counsels from liability for their activities relating to tribunal
litigation. Among the many protections it establishes, the law
now prohibits the monitoring of attorney's interviews with defendants
or suspects, and allows attorneys to request the court to collect
evidence and to investigate relevant entities or individuals
to gather evidence.
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